Fiat Chrysler Sells Magneti Marelli Parts Division

Fiat Chrysler has been mulling with the idea of spinning off several of its non-core assets and finally it has done just that. The automaker has announced a deal to sell its Magneti Marelli parts supplier division for about $7 billion.

The deal involves selling the profitable business to Calsonic Kansei Corporation, one of the leading parts suppliers in Japan. The new entity will be named Magneti Marelli CK Holdings and become the seventh largest parts suppliers in the world. Calsonic Kensei says the combined company will generate an estimated $17.5 billion per year through over 200 facilities around the world.

Calsonic Kansei chief Beda Bolzenius will serve as CEO of the merged entity, with Magneti Marelli’s CEO Ermanno Ferrari joining the new board.

Taking Magneti Marelli out of the FCA umbrella isn’t expected to impact the automaker’s operations. Along with the acquisition deal, FCA has also struck a multi-year procurement deal with the new parts supplier. The deal specifically includes a number of parts from the company’s Italian factories.

“Having carefully examined a range of options to enable Magneti Marelli to express its full potential in the next phase of its development, this combination with Calsonic Kansei has emerged as an ideal opportunity to accelerate Magneti Marelli’s future growth for the benefit of its customers and its outstanding people,” added FCA CEO Mike Manley. “The combined business will continue to be among FCA’s most important business partners and we would like to see that relationship grow even further in the future. The transaction also recognizes the full strategic value of Magneti Marelli and is another important step in our relentless focus on value creation.”

About Nick Saporito

AutoVerdict Senior Editor Nick Saporito began writing about cars at age 13. Nick ran a couple of automotive enthusiast sites for several years, before taking some time off to focus on his career and education. By day he's a marketing executive in the telecom world and by night he hangs out here at AV. You'll find him focusing on tech, design and the industry's future.